Investors Yank $150 Billion From Stocks for 3rd Year In a Row

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Stock marketBy Hibah Yousuf

The U.S. stock market has been on a bull run since early 2009. At the same time, individual investors have been pulling billions of dollars out of stocks each year.

As the S&P 500 rallied about 13% during the first eleven months of 2012, individual investors yanked about $152 billion from the U.S. stock market, according to data from EPFR Global, a Boston-based firm that tracks fund flows for both mutual funds and exchange traded funds.

That marks the third year in a row that investors have withdrawn more than $150 billion from U.S. stock mutual funds and ETFs.

While individual investors have been shunning the market, institutional investors, such as hedge funds and pension funds, have been significantly adding to their stock positions. They've poured more than $80 billion into stocks so far this year.

"Retail investors and institutional investors have acted in complete opposition since the March 2009 lows," noted Simon Ringrose, managing director at EPFR Global.

retail investors

In November alone, individual investors pulled nearly $19 billion out of the market, the most since August 2011, when the debt ceiling debacle and the Standard and Poor's credit rating downgrade took center stage. November's big bleed was a result of more political wrangling in Washington -- this time over the fiscal cliff.

The mass exodus from stocks isn't exactly new. While individual investors have been taking money out of the stock markets since 2005, the outflows accelerated considerably beginning in 2010.

Experts have largely pinned the reason for the stock dump on the Baby Boomer generation.

They represent the largest group among retail investors, and after having their portfolios rocked by the dot-com crash and the financial crisis, they've shifted out of stocks and into bonds much earlier than usual as they head into retirement.

And any money do they do have in the market is consistently going into bond funds, said Ringrose.

Since the beginning of this year, individual investors have plowed more than $90 billion into U.S. bond funds, the most since the record $117 billion in 2009, according to EPFR.

A lack of confidence among investors across age groups has also been a factor, in the wake of high-frequency trading, and incidents like the May 2010 flash crash , Nasdaq's bungled Facebook IPO (FB) and the Knight trading glitch (KCG).

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10 Comments

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Wayne

You mean the rich have yanked 150 billion

December 28 2012 at 10:11 AM Report abuse rate up rate down Reply
patsy

I say let the cliff happen, then Obama can show the people of this country what he can do.He will degrade the republicans any how thats his way of doing things.

December 28 2012 at 9:22 AM Report abuse -1 rate up rate down Reply
keschbach

Don't we just think that it is the baby boomers retiring, and just pulling their money and 401ks out of stocks and into safer and more stable investments?

December 28 2012 at 8:51 AM Report abuse +1 rate up rate down Reply
1 reply to keschbach's comment
smaselli13

10,000 baby boomers will be retiring each day, for the next 19 years................and nothing is being done to address it. It is the ticking bomb, that can explode at any time. All it needs, is one little incident to set it off. The final chapter of this country has been written, and everyone is just ignoring it.

December 28 2012 at 9:33 AM Report abuse +1 rate up rate down Reply
bradleylmarx

The Bernanke dollar bubble printing machine is in full swing, so if you have a clue about investing the market is where to be for at least the next two years. Lot's of world dominating financial fortresses spewing good dividends are available at good prices. Go Ben!

December 28 2012 at 8:43 AM Report abuse rate up rate down Reply
scottee

stock prices, I thought, were based on a company's value.
how did we get so far away from that?
and isn't the stock market just white collar gambling?
why is that legal?
why is it legal for The Fed to print and dilute our dollar?
and if The Fed can just print whatever dollars they want with no accountability, why tax us at all?

December 28 2012 at 7:34 AM Report abuse +1 rate up rate down Reply
larryeart

This article keeps mixing up "stocks" and "stock funds". These are not the same thing and this article is POOR to interchange them.

December 28 2012 at 5:50 AM Report abuse +2 rate up rate down Reply
ZPLAYR

its not going to get any better, the government is spending money almost 2 to 1 so they raise the debt
ceiling and then they spend 3 to 1 it will never change. the idiots in the house and senate will give them selfes
a nice big fat raise because they work so hard going on vacations. our government is making us look like fools
and they are laughing all the way to the bank. but they probably own the bank anyway why else would they bail out a business that makes bad business deals. they sure as hell would not bail out any of our buisnesses if we continued to make bad choices. what a joke this is getting to be

December 27 2012 at 11:38 PM Report abuse +2 rate up rate down Reply
talari

The rich guys know how to hide their money. That's why they are rich and you will never be.

December 27 2012 at 10:55 PM Report abuse +3 rate up rate down Reply
rdd2897

I see the rats are jumping ship before the cliff and the taxes go up

December 27 2012 at 9:16 PM Report abuse -3 rate up rate down Reply
heinerscar

Mr. Mataxas(sp?), the commentator says "Last year it was the debt-limit debacle, that led to the downgrading of the U.S. rating."

False. The downgrade was from Congress' failure to reduce spending. The ratings agencies demanded $4 trillion in reductions over 10 years as a basic, first step toward stabilizing our breath-taking dive into debt. That didn't happen--we cut nothing. So, they cut our rating.

So far this year, we've spent $1.84 per dollar in revenue. (source: Monthly Treasury Statement)

December 27 2012 at 8:14 PM Report abuse +3 rate up rate down Reply